Jobs Revisions May Not Be Major Cause for Worry

A big part of why Friday’s jobs report was so disappointing were the big downward revisions to June and July’s payroll figures. But a closer looks at the numbers suggests the revisions may not be as bad as they first appear.

Of the 74,000 jobs wiped out in the revisions, 38,000 — or just over half — were government jobs. That may not make much difference for Americans trying to find work, but it does suggest that the private sector is holding up better than a glance at today’s report might suggest. Don’t blame the sequester, by the way — most of the revisions were at the local level.

Another major source of the revisions was the auto manufacturing sector, where payrolls fell by more than 10,000 in July, rather than growing by 9,000 as initially reported. The Labor Department said Friday that car makers laid off more workers in July than usual for their annual model-year changeover. That led to a big drop in the July numbers followed by a big increase in August. Ignore the back-and-forth swing and the auto sector has added 8,000 jobs since June.

Not all the revisions can all be ignored. The leisure and hospitality sector added fewer jobs in July than initially believed, and the transportation and warehousing sector cut payrolls rather than expanding them as first reported. Health-care jobs, meanwhile, grew more than first believed.

Taken together, the private sector added around 15,000 fewer non-auto jobs in June and July than initially reported — hardly a huge change in a 114-million-job private economy. Then again, government economists tend to underestimate job growth when the economy is accelerating, and overestimate it during slowdowns. That means that at this stage of the recovery, any downward revision—even a small one—is a move in the wrong direction.

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